Statutory-specific disclosure requirements are primarily provided by the NAIC's Statements of Statutory Accounting Principles. Prior to year-end 2016, auditing literature also required consideration of GAAP disclosure requirements in certain circumstances. However, in 2017, the Audit Issues Task Force (AITF) of the ASB adopted revisions to disclosure guidance for statutory basis financial statements to address the application of AU-C 800 (Special Purpose Financial Statements) to financial statements prepared in accordance with the insurance statutory basis of accounting. The revisions state that GAAP disclosure requirements that have been rejected by the NAIC, in whole or in part, do not need to be evaluated by the auditor in order to determine whether the annual audited statutory financial statements achieve fair presentation in accordance with the insurance statutory basis of accounting. However, if the NAIC has not finalized action on GAAP disclosure requirements, an auditor would still need to assess whether informative disclosure in the annual audited statement financial statements would be needed to achieve fair presentation in accordance with paragraph .17 of AU-C section 800. This assessment would occur when the entity is required to adopt the new standard for GAAP.

Also per the AITF, in accordance with AU-C section 730, Required Supplementary Information, required supplementary information (RSI) is not part of the basic financial statements and the auditor’s opinion on the basic financial statements does not cover RSI. The auditor does not need to apply AU-C 800 to RSI because AU-C 800 addresses the need for disclosure of financial information in order for the basic financial statements to achieve fair presentation and RSI by definition is not part of the basic financial statements.

The guidance applies to all GAAP disclosures that have been rejected by the NAIC, including ASU 2015-09, Disclosures about Short-Duration Contracts. The revised guidance has been added to the AICPA Insurance Accounting and Auditing Guides, which are included on the AICPA's Insurance Expert Panel's webpage.

When GAAP financial statements have been prepared by insurance enterprises for regulatory authorities (although most states require statutory basis financial statements), a reconciliation is generally required between GAAP and SAP equity (surplus) and net income by the regulators. This reconciliation may be required to be included in the notes to the financial statements and covered by the auditor’s report or may be information outside of the financial statements that is required to be provided by the insurance company. When this reconciliation is covered by an audit report to satisfy the requirements of one or more states, we believe all state insurance departments should receive the same report. Individual state requirements and guidance on the content of a reconciliation from GAAP to SAP are found in the applicable state regulations and in the AICPA Industry Audit and Accounting Guides for Life and Health Insurance Entities and Property and Liability Insurance Entities. The SEC does not require a reconciliation but will permit one as long as it is not false or misleading.

GAAP guidance requires that insurance enterprises make disclosures in their GAAP and statutory financial statements concerning permitted accounting practices and certain information about the liability for unpaid claims and claim adjustment expenses. The guidance requires that disclosures be made for those permitted practices that individually or in the aggregate materially affect statutory surplus or risk-based capital (refer to ASC 944-505-50-3). An AICPA Notice to Practitioners clarified that these requirements pertaining to the liability for unpaid claims is applicable to all liabilities for unpaid claim and claim adjustment expenses recorded by insurance enterprises subject to short duration and long duration guidance (e.g., accident and health liabilities), not just property/casualty liabilities. In addition, in practice, these disclosure requirements have been adopted by analogy by some entities that enter into predetermined health care arrangements.